Paris, Brussels set to announce new Air France bailout

Paris and the European Commission have agreed on the conditions and the amount of a second tranche of financial aid to Air France (AF, Paris CDG), Les Echos and Le Monde have reported. “There is an emerging agreement, but nothing has been signed,” a representative of the carrier told Les Echos. A multi-billion-euro capital injection may be announced in the coming days, the source said, adding that “management asked us to block dates” for it in the first days of April. On March 27, following the two newspapers’ reports, French Finance Minister Bruno Le Maire confirmed to France Info radio that the government and the European Commission were nearing a deal. “The negotiation was long and difficult and isn’t entirely finished,” he said, adding that the package still needed final approval from the carrier’s board of directors and from the commission. He declined to comment on specific details, saying only that the deal contained solutions “that are required to maintain fair competition between Air France and other companies” and did not involve route or job cuts. France and the Netherlands, each of which has a 14% stake in Air France-KLM, have already sunk a combined EUR10.4 billion euros (USD12.2 billion) in loans and credit guarantees into the group, but the ongoing travel restrictions mean that both Air France and KLM Royal Dutch Airlines (KL, Amsterdam Schiphol) are still burning money. Sources told Les Echos that Brussels originally wanted to impose on the group conditions of a similar magnitude as those imposed on Lufthansa (LH, Frankfurt Int’l), which reluctantly had to give up 24 daily slots at its two hubs, Frankfurt Int’l and Munich, in exchange for its EUR9 billion (USD10.6 billion) bailout. However, the French airline will likely have to give up fewer slots in Paris than initially sought, in particular at Paris Orly. The French government has reportedly been battling for weeks to obtain lesser concessions, stressing that the number of slots at Orly is limited. Consequently, it will be able to hand over more concessions at Paris CDG, the sources said. As for KLM, however, the Dutch authorities have not yet agreed with the European Commission on the extent of the sacrifices it will have to make in terms of slots at Amsterdam Schiphol. In related news, Air France employees demonstrated at Marseilles airport on March 28 against what they fear is the closure of the airline’s bases at Marseilles, Nice, and Toulouse Blagnac by 2022. An Air France representative confirmed to the Agence France-Presse news agency that the carrier was studying “the closure of its provincial bases for its flight personnel as part of the restructuring of its domestic network. […] This development should be the subject of prior discussions and negotiations with unions and all of the employees concerned, who would be offered mobility within the company.” Air France-KLM lost EUR7.1 billion (USD8.4 billion) in 2020 on the collapse of 59% of its turnover compared to 2019. The workforce fell by more than 10% during the year, with 5,000 departures at KLM and 3,600 at Air France. Plans are underway to shed a further 900 staff at KLM and 4,900 at Air France.